Cities must give funds

Judge rules that state taking money from tax revenue was legal.

May 08, 2010|By Melanie Hicken

CITY HALL — Glendale and Burbank will have to turn over tens of millions in local redevelopment funds to the state after a Sacramento County Superior Court judge this week ruled that the transfer was legal.

Statewide, cities will have to give more than $2 billion generated by the increased property tax values of land within their respective redevelopment zones. And the state is proposing a similar grab next year. In Glendale, that could mean the loss of $13 million; for Burbank, $19 million, city officials said.

During last year’s budget crisis, state lawmakers passed a plan that called for taking $1.7 billion in property tax revenue from local redevelopment agencies, which use the funds for economic development and revitalization projects. The money is to be transferred to local schools to make up for reduced education funding from the state’s general fund.

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But the plan has been in limbo since last year, when the California Redevelopment Assn. filed a lawsuit challenging the transfer as unconstitutional.

On Tuesday, Sacramento County Superior Court Judge Lloyd Connelly ruled that the proposed transfer was legal because schools are “reasonably related” to redevelopment purposes under state law.

The decision was the latest development in an ongoing fight between state lawmakers and local governments as agencies cope with dwindling revenues.

City officials expressed disappointment with the ruling, which they said allowed the state to continue to raid local dollars as a quick fix to a massive state budget deficit.

‘“It doesn’t really solve the state’s structural problems,” said Glendale City Manager Jim Starbird. “It just steals money from investments that should be taking place here today.”

Still, Glendale and Burbank must pay $11 million and $16 million, respectively, by Monday.

While both cities set aside the funds during last year’s budget process, city officials said the loss will be a major blow to their ability to support future projects.

The money has been used to fund projects like Glendale’s $7.9-million Adult Recreation Center.

Burbank Deputy City Manager Justin Hess said the funds are especially needed to stimulate the local economy during the protracted recession.

“You can do projects that actually turn around the economy and produce jobs,” he said. “You are taking the thing that helps spur economic growth for a short-term fix.”